How Spirit Airlines’ bankruptcy could affect your travel

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  • Spirit Airlines filed for bankruptcy protection, but most flights were to continue as scheduled for now.
  • Passengers with existing Spirit reservations should watch for notices of potential changes to their travel plans.
  • The fate of Spirit’s planes depends on whether they are owned or leased, and whether the airline chooses to sell them during bankruptcy proceedings.

Spirit Airlines officially filed for bankruptcy protection Monday after the pioneer of no-frills travel in the United States struggled with a string of quarterly losses, failed merger attempts and looming debt defaults.

Spirit’s problems worsened after the collapse of its planned $3.8 billion merger with JetBlue Airways in January and the impact of RTX’s Pratt & Whitney Geared Turbofan engines grounding many of its planes.

The airline listed its estimated assets and liabilities in the range of $1 billion to $10 billion each, according to a court filing Monday.

Spirit has entered into an agreement with its bondholders that is expected to reduce total debt and provide increased financial flexibility.

The airline, as part of prearranged Chapter 11 bankruptcy protection, has received commitments for a $350 million equity investment from existing bondholders.

Existing bondholders will also provide $300 million in debtor-in-possession (DIP) financing, which, along with available cash, is expected to support the airline through the Chapter 11 process.

Spirit expects to be delisted from the New York Stock Exchange in the near term.

The airline said it expects to continue its flight operations through the procedure and customers can book and fly without interruption. Passengers shouldn’t worry too much about their travel plans or frequent flyer miles right away.

“In the short term, it’s just going to be less,” Robert W. Mann Jr., a former airline executive and current president of RW Mann and Co., an independent airline consulting firm, told USA TODAY. “If you have already received notification that your flight has been canceled or had to be rebooked, you have already received it.”

Spirit has previously announced pilot furloughs and capacity cuts to address ongoing financial problems as well as well-documented engine problems that have grounded many Airbus A320s across airlines. Spirit flies exclusively A320 family aircraft, so it has been heavily impacted by these failures and was already capacity constrained as a result.

Here’s what passengers need to know when Spirit goes bankrupt.

What happens to already booked flights?

Most, if not all, flights should operate as planned in the short term.

Mann said Thanksgiving travel is particularly unlikely to be affected, but it’s possible there could be schedule changes and cancellations later in the winter.

“It’s very possible that by the 45-day mark, which is kind of the end of the year, we may have some other changes,” Mann said.

Travelers with existing Spirit reservations should watch for notifications of any changes to their itinerary from Spirit as their departure date approaches.

“Their best notice will be the notice they get from the carrier, such as time changes or rebooking or inability to rebook, cancellations. Then of course they are subject to the new (Ministry of Transport) rules on how travelers should be handled, so that’s probably a important thing to understand that,” Mann said.

The Ministry of Transport recently finalized guidelines requiring airlines to provide full refunds to passengers if their flight is canceled or delayed more than three hours on a domestic itinerary or six hours on an international itinerary for any reason. Travelers are only entitled to a refund if they choose not to travel on the delayed flight or on an alternative itinerary offered by the airline.

Can I transfer my Spirit loyalty miles/points to another airline?

Generally, airline loyalty points or miles are not transferable, but Mann said frequent flyer programs are valuable assets that often survive bankruptcies.

“It’s an asset, at least from the perspective of people who can acquire them. You also acquire a customer base,” he said. “It could actually be a source of funding going forward.”

It is also possible that Spirit will emerge from bankruptcy through a merger. Many industry observers expect the incoming Trump administration to be friendlier to airline mergers than the Biden administration was. Under Biden, a proposed merger between Spirit and JetBlue was shot down, and Frontier Airlines also recently backed away from an attempt to combine with its yellow ultra-low-cost rival, as first reported by The Wall Street Journal. These agreements could be revived or another potential buyer could enter a different regulatory environment.

If Spirit merges with another airline, it is likely that the frequent flyer program will be part of the package and combined with the other carrier.

Who holds Spirit’s flight?

It depends.

Spirit already does not own all of its planes. For the portion of its fleet that is leased, the lessor will retain ownership and will be free to re-lease to Spirit or another airline, depending on what offers are on the table.

Aircraft owned by Spirit could be sold to raise cash during the bankruptcy, but the airline may choose to sell other assets such as gates and airport slots instead if its executives feel the planes are more likely to generate revenue by remaining in operation .

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Zach Wichter is a travel reporter for USA TODAY based in New York. You can reach him at [email protected].